Thomas v Luv One Luv All Promotions Ltd & Anor

A determination on one of two independently sufficient grounds may not create an issue estoppel where the losing party could not effectively appeal that ground alone. Appealability is relevant to whether the determination was necessary or merely collateral. Even if an estoppel arises, special circumstances may permit the issue to be reopened to avoid injustice.

Goodwill belonging to a partnership is a partnership asset, not property owned individually by each partner. Following dissolution, an individual partner ordinarily cannot assert that goodwill against another partner in a personal passing-off claim. The partnership assets must instead be realised or administered in the winding up, and proceedings concerning them must be brought by or on behalf of the partnership.

Two half-brothers had performed in a musical group which operated as a partnership at will. After the group split, each performed under a similar version of its former name. Earlier UKIPO proceedings established that the goodwill had belonged to the partnership before its dissolution and did not pass to one brother alone.

The respondent subsequently brought passing-off proceedings in his own name. The Intellectual Property Enterprise Court struck out most of the appellants’ defence on the ground of issue estoppel and granted an injunction: [2020] EWHC 1565 (IPEC), [2021] FSR 4. The appellants challenged the striking out of alternative defences that the goodwill remained subject to winding up or had become severed following the split. The central questions concerned the scope of the earlier issue estoppel and whether special circumstances permitted the respondent’s standing to be contested.

1. Appeal allowed in part. The appellants were entitled to advance the alternative defences pleaded in paragraphs 15 and 16 of their defence.

2. The hearing officer had decided that the group operated as a partnership at will before the split and that the goodwill in its name then belonged to the partnership. He had not decided who owned that goodwill after the partnership dissolved, except that it did not belong to the appellant brother alone. The possibilities left open included sole ownership by the respondent, continued ownership as an unrealised partnership asset, and a post-dissolution severance permitting each brother to rely on goodwill against third parties but not against the other.

3. Where a decision rests on two independently sufficient grounds, it is at least doubtful that each ground creates an issue estoppel. A determination must have been necessary to the earlier decision rather than collateral. The inability to mount an effective appeal against one ground is an important pointer when deciding that question. The hearing officer had upheld the trade mark objections both under sections 5(4)(a) and 3(6) of the Trade Marks Act 1994. A challenge to the first ground alone could not have altered the operative result.

4. Even if the hearing officer’s decision created an issue estoppel, special circumstances justified reopening the respondent’s standing. These comprised the absence of an effective appeal on the section 5(4)(a) ground, the failure to appreciate that the partnership had dissolved, the failure to apply the law governing partnership assets on dissolution, and the decision’s continuing effect on the appellant’s ability to trade.

5. Goodwill owned by a partnership is a partnership asset. Individual partners have an interest in its realised value but do not individually own or exercise proprietary rights over it. Under section 39 of the Partnership Act 1890, partnership property must be applied on dissolution in paying liabilities and distributing the surplus. A passing-off action based on that goodwill must therefore be brought by or on behalf of the partnership unless subsequent events have vested the goodwill elsewhere.

6. An ongoing non-partnership alliance differs from a dissolved partnership. A member of such an alliance may, depending on its arrangements, protect collectively owned goodwill against a third party. That principle did not establish that one former partner could sue another personally using goodwill which remained partnership property.

1. Court of Appeal (Civil Division): Allowed the appeal in part and restored the alternative defences concerning the ownership and winding up of the former partnership’s goodwill: [2021] EWCA Civ 732.
2. Intellectual Property Enterprise Court: Struck out most of the defence on issue-estoppel grounds and granted an injunction restraining use of the disputed name: [2020] EWHC 1565 (IPEC), [2021] FSR 4.
3. UK Intellectual Property Office: Upheld opposition to one trade mark application and invalidated an existing registration on relative-right and bad-faith grounds. No appeal was brought.